BeeNext to do one investment per month till year-end

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When Teruhide Sato announced the launch of BeeNext in July and its reported $60-million corpus, it was passed off as just another announcement. Foreign investors had made a beeline for India for a while and there was an abundance of start-ups to be funded. Then came the great correction and very few investors stuck around. Entrepreneurs will argue that the storm has still not passed, but for a few players this is the perfect time to make strategic investments. BeeNext has been one of them. Sato has made as many as 25 investments in India so far. From used-car marketplace Droom to industrial goods e-commerce website Industry Buying and Bangkok-based, Indian-run Zilingo, BeeNext has stars in its portfolio. BeeNext, however, is not done. "We will do an investment a month until the end of this year," said Sato.

These investments, he explained, are made with theme in mind. And, a policy he wants to enforce from his offices in Singapore. "We like a marketplace model with its asset-light approach. We think the internet signifies empowerment, and the marketplace model perfectly represents its beauty."

Sato has some reputation. "He is a founder's VC (venture capital)," said Nishith Rastogi, founder and chief executive officer, Locus.sh, a company BeeNext invested in last year. "Usually, you are apprehensive and anxious before meeting a VC. How do you do an elevator pitch? Literally, 120 seconds into the meeting, Sato told us he wanted to invest," Rastogi added. The numbers, the entrepreneur said, came later. Sato also has a habit of investing in entrepreneurs who he has worked with before. Sandeep Agarwal after his infamous stint at Shopclues found a willing investor in Sato again when he started Droom.

"I think we are operationally hands-off, but strategically hands-on. We become a good hands-on discussion partner when founders need to make a strategic decision. We also bring information from other markets, connections, and best practices," said Sato.

Rastogi agreed. He credits Sato in creating connections that would never have been possible. "He isn't on the board but he opens doors in the APAC and that is invaluable," Rastogi noted.

And, these connections are what helps BeeNext make interesting bets. An early-stage investor, Sato insists he is stage-agnostic.

"We are flexible on stages. Sometimes, we even write our cheques before product launch and sometimes we invest in Series B as well," he said.

The cheque size varies from $200,000 to $5 million and with the recent deflation in the valuation bubble, he sees smart entrepreneurs battling through.

"When we look into another 10-20 years, we cannot be more bullish about India's potential. We believe it is a matter of time for India to succeed. Of course, there will always be fluctuation in the market, but the point will be how long we look at the market. We look at the market very long term," said Sato. And, this long-term thinking gives them a longer exit cycle.

"We are very long term. We do not have to rush for exits for the next 10 years," he explained.

But, with a long game come failures. Some of them high-profile.

"Before BeeNext, I made more than 50 tech investments in the past 10 years and experienced a number of failures. Failures often came when I invest by not making my own absolute decision, but following what others do. We try to make our own decisions by asking ourselves whether we can really believe in the founders, and have full trust with our own passion," said Sato.

Recently, with the capital gains tax being the bane of Indian limited partners, home-grown VCs have started going to Dubai, Hong Kong and Japan to raise money for the next round. It means more competition for BeeNext. Sato, however, dismisses this surging competition.

"We have raised our capital from Japan, the US, Singapore and some other southeast Asian countries. We do not see any hindrance for the next fund-raise," he said.